Dave McClure on growth hacking your way through the Series A crunch
Dave McClure's new talk at Startup Festival in Montreal (#startupfest) slaps entrepreneurs across the face with the dire need for doing more marketing early to survive the funding drought ... a.k.a. growth hack your way through the Series A crunch. Irony obviously intentional.
I use AARRR all the time (and I mean all the time). Dave McClure provided in my mind the most useable framework for startup metrics and for that reason I use these slides all the time. I was excited to hear the newest Dave show and he did not disappoint.
The talk in five seconds
Most startups focus on product way too much and not halfway enough on marketing (measurable marketing, that is). Most startups can't scale customer acquisition profitably. Therefore they won't get funding, Series A/B or whatever, or breakeven for that matter. For that reason, they will die.
Back to basics
Per the Startup Metrics presentation, the first loop to figure out is activation / retention / viral loop BEFORE you go drop all your marketing dollars on the floor. Next is marketing (acquisition/ referral) leading to, yes, profits.
Get into marketing faster
Dave thinks that teams spend way too much time on product at seed, hoping for the best, instead of moving early to demonstration profitable consumer acquisition early. Hope not being a strategy, neither is simply creating a product.
The real question is (collect underpants moment) is : can I scale consumer acquisition profitably ?
Dave calls bullshit on the bubble (as do I) since fundamentally we're not looking a big fat dinosaur startups that built products no one wanted and dumped them on the public markets. Instead we got lean little cockroach startups that fail fast and test their usefulness early.
A startup seed round is more expensive that 3 MBA's and you're guaranteed to learn a LOT more by crashing a startup into the ground. The "fail" budget is much less than a $1M.
Marketing is moving faster than you
Most of the big maketing platforms did not matter 10 years ago (twitter, youtube etc). Now that you're finally nailing FB retargeting, you've got to look at snapchat and whatsapp and all the new monsters of digital distribution. It's hard.
And hence the key question for survival in the incredibly competitive landscape of seed companies becomes:
Can I scalably create channels that pay back within 6-12 months across that landscape.
Quick update on Dave's Moneyball initiative a.ka. 500 Startups
500 startups has now actually invested in 500 startups, on $70M raised, has 26 people on the team of which 12 investing partners, can boast of 22 positive exits so far, including two big ones (Wildfire, Makerbot). 500 Startups invest quantitatively, hoping to get about 25% interesting companies out of 500 and ultimately 5-10% that go big.